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Independent Directors are the non-executive directors, who help in the improvisation of the business activities, thus enhancing the government standards. These Directors don’t have any relation with the company, thus naming it as ‘Independent’ Directors. The tenure for these Directors is up to 5 consecutive years.
This type of Director is elected by the small shareholders. Small Shareholders Director is elected if there is a minimum of 1000 small shareholders, or 10% of the total shareholders, whichever is lower.
A minimum of one woman director is appointed by the company if it satisfies the following criteria – The Company is a listed company and its securities are listed on the stock exchange. The paid-up capital of the company is Rs. 100 crores or more than Rs. 100 crores, and the turnover is Rs. 300 crores or more than Rs.300 crores.
Nominee Directors are appointed by special class of shareholders, such as any financial institution, or third party, or by the Government, in case of any mismanagement or oppression in the business.
Alternate Directors are directors appointed by the Board of Directors to attend the board meeting on behalf of a Director who is absent from the country for more than 3 months.
The Executive Directors are full-time directors of the company. They are generally appointed by the listed companies to take care of the overall management of the company.
The Non-Executive director does not take part in the day to day activities or functions of a company. Their key role is involved in the planning and decision-making activities of a company.
The additional directors are appointed by the board in board meetings. Their appointment is valid until the conclusion of the next general meeting of the shareholders.
The structure of a company is created so as to safeguard the interest of investors. A Director of a company is appointed by the members/shareholders of the company to direct, control the company management in common for the functioning of the business. A Director is elected by the members of the company as per the MOA (Memorandum of Association) & AOA (Articles of Association) of the company. They are considered to be the brain of the company as they are the one to manage and administer the business activities for the company. In the general case, the shareholders are the one who is directors of the company. Types of Directors in a Company
Procedure for Addition/Appointment of New Director
The rules for Addition of a Director is mentioned in the Section 260 & Section 284 under the Companies Act, 2013, which mentions that the AOA (Articles of Association) of the company must provide in the details regarding the addition of the new Director.
The Director who is added must be eligible as per the AOA clause, and also must file and submit his/her consent in the written format of being the Director, and the written format thus submitted must be registered by the company.
Documents required for Addition of the new Director
◉ Passport of the Director (in case of an NRI)
◉ Identity proof (PAN card, Aadhaar Card, Voter ID, Passport)
◉ Address proof (Bank Statement / DL / Voter's ID / Utility Bill)
◉ DIN of the Director, in case already allotted.
◉ DSC (Digital Signature Certificate) of the proposed director
Procedure for Resignation of Director
If any Director submits his/her resignation letter, then the company will hold a board meeting to discuss whether to accept the resignation letter or not.
After the resolution is passed in the board meeting, the resigning director must file and submit the form DIR-11 (optional) along with certain documents, such as the copy of the resignation letter, copy of the resolution, and also the proof of delivery of the resignation letter (or undertaking by company) and the company will file and submit DIR-12 with the resignation letter and the resolution. After the submission of these documents, the name of the Director will be erased/removed from the data of the company.
Procedure for Removal of Director
Step 1:- As per section 169 of the Companies Act, 2013, a director can be removed by passing an ordinary resolution. A special notice shall be required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is being removed.
Step 2:- Before passing the resolution by the shareholders in the EGM (depending on the majority), an opportunity of being heard will be given to the Director being removed.
Step 3:- The company will then file DIR-12 for removal of director. As removal of the director is different than resignation of director, the case will be allocated to RD and RD will give a reasonable opportunity of being heard to both Company and Director. on why the Director should be removed.
Step 4:- After hearing both of the sides, RD will take the final decision.
A Director of a Company must be above the age of 18 and must have a Director Identification Number. The person can be an Indian National or a Foreign National.
· Public Limited Company - Three
· Private Limited Company - Two
· One Person Company - One
The form DIR-12 must be filed within 30 days of change in Directorship. Be it Appointment, removal, resignation, death or any other cause of change in directorship status.